Appeals Court Grants Uber and Lyft Reprieve From California Shutdown
An appeals court allows Uber and Lyft to continue operating in California as independent contractors while they challenge a judge's order. The companies now have until early September to outline their compliance plans with the state's gig worker labor law.
An appeals court grants Uber and Lyft a last-minute reprieve, allowing them to keep operating in California without immediately reclassifying their drivers as employees. This decision averts a threatened midnight shutdown that the ride-hailing companies warned would leave hundreds of thousands of drivers without work and millions of customers without rides in one of their largest markets.
The ruling gives the companies temporary permission to maintain their drivers' independent contractor status while they continue to fight a lower court order tied to Assembly Bill 5. This state labor law makes it significantly harder for companies to classify workers as independent contractors, aiming to grant gig workers access to essential benefits like employer-sponsored health insurance, overtime pay, and paid sick leave.
Uber and Lyft argue that AB5 does not apply to them because they function as technology platforms rather than traditional transportation businesses. The appeals court now requires the companies to submit formal plans by early September detailing exactly how they intend to comply with the state law as the underlying lawsuit moves forward.